“Growth in shareholder value” is DRD deputy CEO Ian Murray’s short answer to the question: “what drives the company’s management of its reserves and resources?”

    “We need to optimise our cash flow for shareholders through optimised life of mine plans and adherence to those plans.”

    The targeted return on investment – 18%.

    Growth in reserves and resources, Murray says, is pursued both through acquisition and through exploration.

    “And we’re exploring inside and outside of our existing lease areas.”

    The cost of growing resources, either through acquisition or exploration, should not be higher than US$10 per ounce, he says, while the cost of growing reserves, either through acquisition or through conversion from resources, should not be higher than US$50 per ounce.

    Conversion from reserves to resources depends on “modifying factors” – more specifically, the company’s ability, within an acceptable timeframe, to lower costs and thus pay limits.

    What is deemed to be an acceptable timeframe?

    “This will vary from operation to operation depending on a range of factors, not least their locale and the prevailing conditions – economic, legal and environmental, amongst others,” says Murray.

    With 63.8 million ounces of resources and 15.8 million ounces of reserves at year-end, is DRD where it should be?

    Murray believes so.

    The company’s North West Operations in South Africa have been a concern, as has Tolukuma in Papua New Guinea, but on-going exploration activities at both point to “vast improvements”.

    At the North West Operations, attention has been focused on opening up pillars abandoned by the mines’ previous owners – and exploration for reef in areas of heavy faulting – ‘white areas’, so-called because they are indeed coloured white on existing lease maps to indicate ‘no-go’.

    DRD has within its ranks the necessary geological and other expertise, Murray says, to stage this two-pronged, pillar and ‘white area’ assault.

    Special recce teams have been put together specifically to investigate the abandoned pillars, gain a better understanding of the conditions and assess possibilities for conversion to resources and reserves. Results have been tantalising, with some pillar areas revealing grades of 9 to 10 grams per ton at 1 to 1.5 metre stoping widths.

    Some R13 million of DRD’s Project Boost spending is currently being directed towards three ‘white areas’ at the North West Operations.